For Attn: Jennifer Braun, U.S. Trustee: Office of the U.S. Trustee, Woodland
Hills, CA.

JUDGES: MAUREEN A. TIGHE, United States Bankruptcy Judge.

OPINIONBY: MAUREEN A. TIGHE

OPINION:

AMENDED MEMORANDUM OF DECISION AND ORDER

Introduction

This case presents the issue of the lawful parameters of activities by
bankruptcy petition preparers following enactment of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005 (“the new Act” or “BAPCPA”).
Immediately before the effective date and following enactment of BAPCPA, the
bankruptcy courts have seen increased numbers of unrepresented debtors file
bankruptcy. n1

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n1 The proportion of debtors unrepresented by counsel in this district rose
to approximately 27% of all debtors last year. Shortly before the effective date
of the new Act, over 50% of the debtors were unrepresented.

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This case involves Consumer Credit Services of America, Inc. (“CCSA”), a
Florida-based bankruptcy petition preparer corporation which operates
principally through its website: http://www.ccsofamerica.com/. n2 Advertising
nationally through multiple media outlets, CCSA attempts [*3] to draw in the
business of potential bankruptcy debtors across the country. CCSA and its
employee and officer, Greg Bohl, have repeatedly engaged in the unauthorized
practice of law and violated the Bankruptcy Code provisions regulating
bankruptcy petition preparers. They have given legal advice, attempted to
explain court procedures, suggested filing strategies, used unlawful
questionnaires, and selected exemptions. To make matters more dangerous, CCSA
and Mr. Bohl have done so without any real apprehension that what they are doing
is the unauthorized practice of law. To the contrary, they appear to be quite
proud of their “innovative” business model and strenuously argue that they are
one of the “legitimate” bankruptcy petition preparers in the marketplace.

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n2 The name Consumer Credit Services of America, Inc. is not to be confused
with Consumer Credit Counseling Service (CCCS), a certified credit counseling
agency under 11 U.S.C. � 111. The choice of the CCSA name and its similarity to
an established and well-respected non-profit group raises additional questions
which were not explored here.

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II. Preliminary Matters

The findings contained herein are based on the two hearings held in this
matter and all documents filed in the court record. CCSA has not appeared at any
of the several order to show cause hearings, despite having been noticed of
them. Under LBR 2090-1(g)(1), “[a] corporation, partnership or unincorporated
association may not file a petition or otherwise appear without counsel in any
case or proceeding” except in circumstances not relevant here. Under this rule,
Mr. Bohl’s telephonic appearance does not qualify as an appearance on behalf of
CCSA as Mr. Bohl is admittedly no lawyer. n3 Thus, CCSA filed no objections and
made no appearance.

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n3 Mr. Bohl acts like one, however. He often referred to his experience
working for a local bankruptcy attorney and with bankruptcy trustees. He also
frequently cited to and analyzed cases at the hearings, and apparently is at
least a co-author of the website.

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Additionally, Mr. Bohl chose not to appear in person, despite ample warnings
that [*5] he could not testify telephonically. By not appearing in person, Mr.
Bohl was advised that he waived the right to testify, put forward evidence, or
cross-examine any witnesses who testified at the hearings. He was, however,
allowed to argue telephonically and invited to file any documentary evidence he
wished, which he did.

III. Factual Background

Sometime in mid-November 2005, Ceasar Gaite Bernales contacted CCSA to assist
him in filing for bankruptcy. He found CCSA, which is operated out of Florida,
online through its website. Bernales’s assigned “case coordinator” was Greg S.
Bohl, a non-attorney. n4 On November 22, 2005, CCSA e-mailed Bernales “emergency
bankruptcy documents,” including a Voluntary Petition, a Statement of Social
Security Number, a Verification for Creditor Matrix, an Application to Pay
Filing Fee in Installments, and an Order Approving Payment of Filing Fee in
Installments.

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n4 Although Mr. Bohl’s is a self-described “case coordinator” and an employee
and officer of CCSA, he is also legally a bankruptcy petition preparer himself
under 11 U.S.C. � 110(a)(1) (“‘[B]ankruptcy petition preparer’ means a person,
other than an attorney for the debtor or an employee of such attorney under the
direct supervision of such attorney, who prepares for compensation a document
for filing.”). Here, there is no dispute that Mr. Bohl prepared Bernales’s
petition for filing for compensation. Therefore, he is a bankruptcy petition
preparer. Note that the language of section 110(a)(1) contains no explicit
exception for mere employees of bankruptcy petition preparers as it does for
employees of attorneys. Congress clearly knew how to exempt employees of
bankruptcy petition preparers. Id.; see also 11 U.S.C. � 101(12A)(A) (providing
that employees of bankruptcy petition preparers are not subject to the “debt
relief agency” provisions). Congress’s failure to exempt employees of bankruptcy
petition preparers in section 110(a)(1) suggests that Congress had no such
intent. Further, any contrary reading would allow individuals to more easily
circumvent the provisions of section 110.

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On November 23, 2005, Bernales filed the Petition and the Verification for
Creditor Matrix. Bernales’s request to pay the filing fee in installments was
denied. Bernales promptly amended his petition and paid his filing fee in full.

That very same day, the clerk’s office issued a Notice of Case Deficiency
under 11 U.S.C. � 521(a)(1) and Bankruptcy Rule 1007 and a Case Commencement
Deficiency Notice. These notices advised the Debtor to file the remaining
required documents within fifteen days or face possible dismissal.

After receiving these notices, Bernales and CCSA contacted each other back
and forth by e-mail. CCSA advised the Debtor it would provide the missing
documents “a day or 2 prior to the deadline.” By December 8, 2005, the filing
deadline, Bernales still had not received the remaining documents. Instead of
receiving the documents or a response, he received an e-mail dated December 9,
2005, explaining that his case coordinator, Greg Bohl, was out on medical leave.
This e-mail requested Bernales to fill out a Questionnaire and return it by fax
to enable CCSA to prepare the remaining bankruptcy documents. Bernales faxed
over a completed copy of [*7] the Questionnaire.

After Bernales faxed over the Questionnaire, he asked CCSA by email whether
he “need[ed] to contact the court to get an extension on the 15 day deadline.”
CCSA replied with a question: “Is it possible that you can file a request for an
extension of time to submit your bankruptcy schedules and other documents until
Monday [December 12, 2005]? . . . That will automatically extend the time until
it is ruled on and will give us more time to finalize your documents.” After
receiving this suggestion, the Debtor lodged with the Court an Order Pursuant to
Extending Time to File the Required Documents, which would extend the filing
deadline to December 16, 2005.

CCSA finally e-mailed some of the remaining documents to the Debtor on the
afternoon of December 13, 2005. Bernales finally filed these documents on
December 15, 2005. The Court signed Debtor’s proposed order to extend the filing
deadline on December 19, 2005, thus extending the deadline to December 16, 2005.

Notwithstanding the fact that Bernales filed additional documents on December
15, 2005, Bernales still failed to timely file a significant number of required
documents, including (1) Debtor’s Credit Counseling [*8] Certificate, (2)
Debtor’s Debt Repayment Plan (if any), (3) the current version of the
Declaration Concerning Debtor’s Schedules (Official Form B6), (4) all of Debtor
‘s payment advices or other evidences of payment for the entire 60-day
prepetition period, (5) a Statement of Related Cases (Official Form F 1015-2.1),
(6) a Notice of Available Chapters (Official Form B201), (7) a Statement
Regarding Assistance of Non-Attorney with Respect to the Filing of Bankruptcy
Case (LBR 1002-1), (8) a Declaration and Signature of Non-Attorney Bankruptcy
Petition Preparer (Official Form B19A), (9) a Notice to Debtor by Non-Attorney
Bankruptcy Petition Preparer (Official Form B19B), and (10) a Disclosure of
Compensation of Bankruptcy Petition Preparer. n5 On January 31, 2006, another
order to show cause was issued re: dismissal for Debtor’s failure to file these
required documents. Having failed to cure this defect by the time of the hearing
on the order to show cause, and having failed to appear at that hearing, Debtor
‘s case was dismissed on February 16, 2006.

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n5 All of these forms had been available and easily accessible for free at
the website for the U.S. Bankruptcy Court for the Central District of California
(http://www.cacb.uscourts.gov/) in the “Chapter 7 Package” section.

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This case first came to the court’s attention when the Debtor filed a
proposed order to extend the filing deadline. Based on the unusual nature of
that document and after a subsequent review of Debtor’s file, the court issued
an order to show cause re: ‘Disgorgement of Fees by Bankruptcy Petition Preparer
Consumer Credit Services of America, Inc. and Greg S. Bohl” on December 20,
2005. This order requested that CCSA and Mr. Bohl “explain how the petition was
prepared and who gave the Debtor instructions to move for an order extending the
time to file the required documents.” The order also requested that they
“explain who prepared this motion” (meaning the proposed order) and “why Debtor
‘s schedules, Form 22A statement, statement of financial affairs, and employee
income record were not timely filed.”

A hearing was held on January 11, 2006. Bernales personally appeared and Mr.
Bohl appeared telephonically. CCSA made no appearance. Although the order to
show cause set a January 4, 2006 deadline for written responses, a written
response in the form of a declaration was not filed by Mr. Bohl until January
10, 2006, the day prior to the hearing. n6 At the hearing it was determined what[*10] while CCSA and Mr. Bohl may not have been ghostwriting motions for the
Debtor, there were strong reasons to suspect that CCSA and Mr. Bohl might have
been engaging in the unauthorized practice of law in this case, in violation of
11 U.S.C. � 110(e), and might have violated other provisions of 11 U.S.C. � 110.

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n6 At the hearing, Mr. Bohl attempted to justify his tardy response by
arguing that CCSA rarely receives mail and so they do not check the mailbox very
often. Given the time-sensitive nature of filing for bankruptcy, as this case
amply demonstrates, CCSA is strongly encouraged to change its mail review and
pick-up procedures.

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Determining that an evidentiary hearing would be required, the hearing was
continued to February 15, 2006. Mr. Bohl was invited to file a supplementary
response if he wished. The Debtor was instructed to file with the Court the
e-mail exchanges between himself, CCSA and Mr. Bohl, which he subsequently did
on January 20, 2006. Upon review [*11] of the e-mail exchange and upon this
Court’s determination that an injunction against CCSA and Mr. Bohl may be
appropriate, the hearing on February 15, 2006 was continued to March 15, 2006 to
give CCSA and Mr. Bohl time to respond to the court’s additional concerns. CCSA
and Mr. Bohl were notified in the order continuing the hearing to be prepared to
show cause why an injunction against their operating in the Central District of
California should not be issued. Neither CCSA nor Mr. Bohl filed any additional
documents. The United States Trustee, however, filed a request for judicial
notice, which included orders from several other bankruptcy courts enjoining
CCSA, Mr. Bohl and their associates from, inter alia, engaging in the
unauthorized practice of law and assisting debtors in Texas.

At the March 15, 2006 hearing, Mr. Bohl appeared by telephone. CCSA again did
not appear, nor did the Debtor. The Assistant United States Trustee appeared.

Mr. Bohl explained that he is a part-owner and officer of CCSA and that
Claudia Fontalvo, another non-attorney, is also a part-owner and officer. CCSA
is incorporated in Florida and is headquartered in Jacksonville, Florida. They
have been in bankruptcy [*12] petition preparer business for over three years.
Mr. Bohl argued that there were a lot of bad bankruptcy petition preparers, but
that he is not one of them. n7 He asserted that he and CCSA did nothing wrong,
and if anything was done wrong, it was unintentional.

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n7 Mr. Bohl contended on the record that he and CCSA are in the process of
shifting out of the bankruptcy petition preparer business into the business of
selling software to help debtors and attorneys complete bankruptcy-related
forms. However, the Assistant U.S. Trustee disclosed to the court that similar
representations had been made to the Texas bankruptcy courts during hearings on
similar orders to show cause. To date, now two months after the March 15, 2006
hearing, neither Mr. Bohl nor CCSA appear to have made any further attempts to
leave the bankruptcy petition preparer business. This appears to be one of
several misrepresentations Mr. Bohl made to the court, and evinces a fervent
desire to keep the business going by any means necessary.

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Mr. Bohl [*13] explained that CCSA uses “bankruptcy filler software” to help
debtors complete their bankruptcy petition documents. He argued that this
software simply replicates the official forms and makes it easier for debtors to
complete them.

The court, Mr. Bohl and the Assistant U.S. Trustee reviewed the remaining
facts of Bernales’s case. Of note, Mr. Bohl asserted that he and CCSA never
encouraged Bernales to file a motion for extension and were not aware any such
motion had ever been filed. The court and Mr. Bohl discussed the new debt relief
agency requirements and how these relate to bankruptcy petition preparers and
their duties. Finally, the court, Mr. Bohl and the Assistant U.S. Trustee
discussed in detail the CCSA website.

III. Discussion

11 U.S.C. � 110 sets forth limits on the conduct of bankruptcy petition
preparers in their assistance of debtors in filing cases under Title 11. As
noted above, both CCSA and Mr. Bohl are bankruptcy petition preparers under 11
U.S.C. � 110(a)(1). Therefore, the limitations set forth in this section apply
to their conduct in this case.

A. Prohibition on Offering Legal Advice

11 U.S.C. � 110(e) [*14] expressly prohibits bankruptcy petition preparers
from offering legal advice. “A bankruptcy petition preparer may not offer a
potential bankruptcy debtor any legal advice . . . .” 11 U.S.C. � 110(e)(2)(A).
Legal advice, for the purpose of this section, “includes advising the debtor (i)
whether (I) to file a petition under this title; or (II) commencing a case under
chapter 7, 11, 12, or 13 is appropriate; (ii) whether the debtor’s debts will be
discharged in a case under this title; (iii) whether the debtor will be able to
retain the debtor’s home, car, or other property after commencing a case under
this title; (iv) concerning (I) the tax consequences of a case brought under
this title; or (II) the dischargeability of tax claims; (v) whether the debtor
may or should repay debts to a creditor or enter into a reaffirmation agreement
with a creditor to reaffirm a debt; (vi) concerning how to characterize the
nature of the debtor’s interests in property or the debtor’s debts; or (vii)
concerning bankruptcy procedures and rights.” 11 U.S.C. � 110(e)(2)(B). While
these areas were all prohibited as a matter of case law previously, the BAPCPA[*15] amendments have now explicitly detailed them as well in this section,
putting bankruptcy petition preparers on greater notice of what constitutes the
unauthorized practice of law. The above list is neither exclusive nor
exhaustive. Rather, it is a set of examples explaining what constitutes legal
advice.

1. What Constitutes Legal Advice

By prohibiting the offering of “legal advice,” 11 U.S.C. � 110(e)(2) must be
understood as a general prohibition against the practice of law by bankruptcy
petition preparers, except where otherwise permitted by applicable law. “[S]tate
law is properly considered in determining whether the unauthorized practice of
law has occurred in a bankruptcy court.” In re Boettcher, 262 B.R. 94, 96
(Bankr. N.D. Cal. 2001); see also Taub v. Weber, 366 F.3d 966, 968 (9th Cir.
2004). California law is quite explicit: “No person shall practice law in
California unless the person is an active member of the State Bar.” Cal. Bus. &
Prof. Code � 6125. n8 According to case law interpreting this statute,
practicing law means “the doing and performing services in a court of justice[*16] in any matter depending therein throughout its various stages and in
conformity with the adopted rules of procedure.” Birbrower, Montalbano, Condon &
Frank, P.C. v. Superior Court, 17 Cal. 4th 119, 128 (Cal. 1998). This
specifically includes offering “legal advice . . whether or not . . . rendered
in the course of litigation.” Id.

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n8 Violation of Cal. Bus. & Prof. Code � 6125 is a misdemeanor under Cal.
Bus. & Prof. Code � 6126. In addition to criminal penalties under section 6126,
there are potential civil penalties under section 6126.5. A person who engages
in the unauthorized practice of law is also potentially subject to contempt
under section 6127.

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Section 110(k), a more seasoned section of the Code, explains that “[n]othing
in section 110] shall be construed to permit activities that are otherwise
prohibited by law, including rules and laws that prohibit the unauthorized
practice of law.” 11 U.S.C. � 110(k) [*17] . Cases have interpreted this
section to prohibit the unauthorized practice of law by bankruptcy petition
preparers in a variety of different factual situations. In re Pillot, 286 B.R.
157 (Bankr. C.D. Cal. 2002) involved an internet website that offered a
bankruptcy program to assist debtors to file for bankruptcy. Among other things,
the program made the debtor’s exemption choice and provided her with legal
advice about the bankruptcy process. The court found that this was the
unauthorized practice of law and imposed sanctions. In In re Glad, 98 B.R. 976,
978 (9th Cir. B.A.P. 1989), the court found that a nonattorney engaged in the
unauthorized practice of law by “interview[ing] and solicit[ing] information
from the debtor with regard to his financial status and [ILLEGIBLE
TEXT]assisting] the debtor in preparation of the bankruptcy schedules.” n9

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n9 Glad also noted that a “non-attorney will be subject to the requirements
of � 329 if he engages in rendering ‘legal services’ to the debtor.” 98 B.R. at
977.

As will also prove relevant to this case, in In re Powell, 266 B.R. 450, 452
(Bankr. N.D. Cal. 2001), the court noted that “[a] non-lawyer engages in the
unauthorized practice of law when he or she determines for a party the kind of
legal document necessary in order to effect the party’s purpose.” See also
Boettcher, 262 B.R. at 96 (holding that it was the unauthorized practice of law
for a bankruptcy petition preparer to prepare a “fill in the blank” motions to
dismiss for a continuance for the debtor). n10

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n10 Boettcher also noted that “[i]t is of course just as unlawful for a
nonlawyer to provide bankruptcy schedules to debtors as any other forms; the
only legitimate functions a nonlawyer can perform is to type and file forms
obtained and completed by debtors.” 262 B.R. at 97 n.2; but see In re Herren,
138 B.R. 989, 994 (Bankr. D. Wyo. 1992) (“Providing copies of the Official Forms
necessary to filing a petition for bankruptcy relief is a legitimate and
necessary service to the public.”).

Interpreting legal terms also constitutes the unauthorized practice of law, a
point which will prove relevant to the legality of the use of “questionnaires”
utilizing simplified language to assist debtors in the filing of their
petitions. In Taub v. Weber, 366 F.3d 966 (9th Cir. 2004), n11 for example, the
court held that a bankruptcy petition preparer engaged in the unauthorized
practice of law when he interpreted the terms “market value” and “secured claim
or exemption” for a debtor in connection with the completion of bankruptcy
forms. Id. at 971; see also In re Agyekum, 225 B.R. 695, 702 (9th Cir. B.A.P.
1998) (holding that bankruptcy petition preparer use of a bankruptcy handbook
which provided information about the bankruptcy process, information on what to
consider when filing bankruptcy and a glossary of bankruptcy terms constituted
the unauthorized practice of law).

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n11 Although Taub applied Oregon law, Oregon’s definition of what constitutes
he practice of law is substantially similar to California’s: “[T]he practice of
law includes the drafting or selection of documents and the giving of advice in
regard thereto any time an informed or trained discretion must be exercised in
the selection or drafting of a document [ILLEGIBLE TEXT] the needs of the
persons being served . . . [A]ny exercise of an intelligent choice, or an
informed discretion in advising another of his legal rights and duties, will
bring the activity within the practice of the profession . . . .” Taub, 366 F.3d
at 969 (citation omitted).

Similarly, “[s]oliciting information from a debtor [by use of a
questionnaire] which is then typed into schedules constitutes the unauthorized
practice of law.” Agyekum, 225 B.R. at 702; see also In re McCarthy, 149 B.R.
162, 166 (Bankr. S.D. Cal. 1992); In re Anderson, 79 B.R. 482, 485 (Bankr. S.D.
Cal. 1987) (paralegal interviewed debtor, solicited information, prepared
bankruptcy schedules, advised the debtor of her legal rights vis-a-vis secured
collateral and the differences between a Chapter 13 and a Chapter 7 filing,
advised the debtor on the necessity to file amendments to her schedules to
reflect a tax refund, and selected her exemptions). More to the point,[p]lugging in solicited information from questionnaires and personal interviews
to a pre-packaged bankruptcy software program constitutes the unauthorized
practice of aw. Moreover, advising of available exemptions from which to choose,
or actually choosing an exemption for the debtor with no explanation, requires
the exercise of legal judgment beyond the capacity and knowledge of lay persons.
” In re Kaitangian, 218 B.R. 102, 110 (Bankr. S.D. Cal. 1998). [*21] The law is
clear: “[T]he services of bankruptcy petition preparers are strictly limited to
typing bankruptcy forms.” Id. at 113. n12

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n12 The fact that CCSA and Mr. Bohl would also be “legal document assistants”
under Cal. Bus. & Profs. Code � 6400(c) does not change the fact that they are
still prohibited from engaging in the practice of law without a license. Legal
document assistants are limited to completing legal documents in a ministerial
manner, providing general published factual information, making published legal
documents available and filing and serving legal documents. Id. � 6400(d).
Furthermore, section 6402 explicitly does not sanction, authorize or encourage
the practice of law by legal document assistants. Id. � 6402.

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2. Whether New BAPCPA Provisions Allow Limited Practice of Law

Mr Bohl suggested that he was simply attempting to comply with certain
revisions of the bankruptcy law under BAPCPA and seemed to think that recent
changes [*22] to the Code may have altered the general prohibition against the
unauthorized practice of law by bankruptcy petition preparers. As discussed
below, I hold that the BAPCPA has not changed the general prohibition against
the unauthorized practice of law. If anything, the new Act has made it even more
clear that bankruptcy petition preparers are not allowed to engage in the
unauthorized practice of law.

The new Act explicitly does not preempt state law on the unauthorized
practice of law. 11 U.S.C. �� 110, 526, 527 and 528 all explicitly do not
preempt state law on this subject. n13 Instead, these sections generally
incorporate such law.

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n13 11 U.S.C. � 110(k) provides that “[n]othing in [section 110] shall be
construed to permit activities that are otherwise prohibited by law, including
rules and laws that prohibit the unauthorized practice of law.” Similarly, 11
U.S.C. � 526(d) states:

(1) annul, alter, affect, or exempt any person subject to such
sections from complying with any law of any State except to the extent
that such law is inconsistent with those sections, and then only to
the extent of the inconsistency; or

(2) be deemed to limit or curtail the authority or ability —

(A) of a State or subdivision or instrumentality thereof, to
determine and enforce qualifications for the practice of law under the
laws of that State; or

(B) of a Federal court to determine and enforce the qualifications for
the practice of law before that court.

On the other hand, had the new Act imposed any duties on bankruptcy petition
preparers that constitute the practice of law, these duties would be lawfully
permitted. Contrary state law would be preempted. However, “[t]he centerpiece of
any preemption analysis is congressional purpose . . . . ‘[A]ny understanding of
the scope of a pre-emption statute must rest primarily on ‘a fair understanding
of congressional purpose.'” PG & E Co. v. California, 350 F.3d 932, 943 (9th
Cir.2003) (holding that presumption against preemption of generally applicable
state law applies in bankruptcy area). “To displace traditional state regulation
. . ., the federal statutory purpose must be ‘clear and manifest.'” BFP v.
Resolution Trust Corp., 511 U.S. 531, 544 (1994).

The new Act certainly has imposed more requirements on bankruptcy petition
preparers, but none of these clearly or manifestly require bankruptcy petition
preparers to engage in the practice of law. With respect to 11 U.S.C. � 110,
despite significant statutory changes, such as the new notice requirement under
subsection (b)(2), “[n]othing in th[at] section shall be construed [*24] to
permit activities that are otherwise prohibited by law, including rules and laws
that prohibit the unauthorized practice of aw.” 11 U.S.C. � 110(k). The new
notice requirement in subsection (b)(2) reiterates this point, in that it is
required to state “in simple language that the bankruptcy petition preparer is
not an attorney and may not practice law or give legal advice.” 11 U.S.C. �
110(b)(2)(i). The notice may give examples of advice the bankruptcy petition
preparer may not give, and must be signed by the Debtor. Id. � 110(b)(2)(ii) &
(iii). n14

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n14 Providing debtors with forms that are required to be transmitted under 11
U.S.C. �� 110 and 527 does not constitute the practice of law.

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Aside from 11 U.S.C. � 110, the only area of the Code that has changed the
duties of bankruptcy petition preparers is the “debt relief agency” provisions.
See 11 U.S.C. �� 526 [*25] – 528. These provisions apply to bankruptcy petition
preparers because, under 11 U.S.C. � 101(12A), they are expressly defined as
debt relief agencies.

Having reviewed these statutory provisions, the only section that comes
anywhere close to modifying the general prohibition against the unauthorized
practice of law by bankruptcy petition preparers is 11 U.S.C. � 526(a)(3)(B).
n15 Under this section, “[a] debt relief agency shall not . . . misrepresent to
any assisted person or prospective assisted person, directly or indirectly,
affirmatively or by material omission, with respect to . . . the benefits and
risks that may result if such person becomes a debtor in a case under this
title.” 11 U.S.C. � 526(a)(3)(B). n16 It could be argued that this section may
provide that, in certain extreme circumstances, a bankruptcy petition preparer
may have a duty to explain the benefits and risks of filing bankruptcy, meaning,
to this limited extent, bankruptcy petition preparers would be permitted to
practice law. As discussed below, however, Congress has indicated through other
sections in the new [*26] Act that this cannot be what section 526(a)(3)(B)
means.

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n15 11 U.S.C.A. � 527(c) also imposes certain legal duties on “debt relief
agencies,” such as to provide information on “how to provide all the information
the assisted person is required to provide under this title pursuant to section
521.” However, this duty extends only “to the extent permitted by nonbankruptcy
law.” Id. Thus, section 527(c) does not impose any such duties on bankruptcy
petition preparers.

Applying the rules of preemption, there is neither a manifest nor clear
intent to preempt state law prohibiting the unauthorized practice of law. If
anything, the BAPCPA has made it much clearer that bankruptcy petition preparers
without exception are prohibited from practicing law. 11 U.S.C. � 110(e)(2)[*27] provides, in part, that “[a] bankruptcy petition preparer may not offer a
potential bankruptcy debtor any legal advice.” 11 U.S.C. � 110(b)(2) requires
bankruptcy petition preparers to provide debtors with a notice stating “in
simple language that a bankruptcy petition preparer is not an attorney and may
not practice law or give legal advice.” Bankruptcy petition preparers are
prohibited from using “the word ‘legal’ or any similar term in any
advertisements, or to advertise under any category that includes the word ‘legal
‘ or any similar term.” 11 U.S.C. � 110(f). Finally, 11 U.S.C. � 527, one of the
“debt relief agency” provisions similarly provides that bankruptcy petition
preparers must provide debtors with an additional statement that says: “You are
generally permitted to represent yourself in litigation in bankruptcy court, but
only attorneys, not bankruptcy petition preparers, can give you legal advice.”
11 U.S.C. � 527(b).

Given these other statutory provisions, it is clear that whatever 11 U.S.C. �
526(a)(3)(B) means, it is not a license to engage [*28] in the practice of law.
Instead, it appears that Congress was focused on the word “misrepresent.”
However, for there to be a misrepresentation, there must first be a
representation. See In re Rubin, 875 F.2d 755, 759 (9th Cir. 1989) (describing
the elements of fraudulent misrepresentation under 11 U.S.C. � 523(a)(2)(A)).
Yet, under applicable law, there cannot be a representation. If the bankruptcy
petition preparer remains the “mute typist” that law requires him or her to be,
then there is no risk of misrepresentation. By contrast, it is only when
bankruptcy petition preparers do give legal advice and make legal
representations that the risk of direct or indirect misrepresentation arises.
n17 Thus, I conclude that no section of the BAPCPA permits bankruptcy petition
preparers to engage in the practice of law.

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – –

n17 There is an excellent example of such a misrepresentation on CCSA’s
website in the FAQ section. Question: “Are there any negative consequences to
filing bankruptcy?” Answer. “Despite the many rumors propagated for years by
creditors, debt collectors, debt counseling organizations and the like for their
own self-interest, there are virtually no negative consequences to filing
bankruptcy. . . . ”

CCSA engaged in the unauthorized practice of law in giving the Debtor filing
fee advice in its November 22, 2005 e-mail to the Debtor. This e-mail included
certain “emergency bankruptcy documents,” including an Application to Pay Filing
Fee in installments (Official Form 3A). This e-mail reads, in pertinent part, as
follows:

Include a POSTAL MONEY ORDER (only U.S. Postal Money Orders are
accepted) or CASHIER’S CHECK in the amount of $ 274 payable to “Clerk,
U.S. Bankruptcy Court” for the court filing fee. Most bankruptcy
courts will allow you to pay the filing fee in monthly installments,
if necessary. Please contact your local bankruptcy court at the above
telephone number for information about its local policy regarding
payment of the filing fee. A fillable Application to Pay Filing Fee in
Installments is attached. Complete the form after speaking to your
local bankruptcy court clerk as to how the installment fee needs to be
paid.

This is clearly legal advice and, at least in this district, it would be
incomplete advice, misleading, and potentially harmful. Under LBR 1006-1, an
individual [*30] may apply for permission to pay the filing fee in
installments, but only if he or she is “unable to pay the full filing fee.” In
addition to a written application, a local rule requires that the application be
accompanied by “a declaration under penalty of perjury stating whether the
debtor received assistance in preparing the petition and whether the debtor paid
anyone for such assistance.” It is extremely rare for an installment fee
application to be approved in this district where payment has previously been
made to a bankruptcy petition preparer or an attorney. See FRBP 1006(b). In this
case, no such declaration was provided to the Debtor or filed with the Court.
The fact that CCSA couches its language in admonitions to call the clerk does
not change the fact that the above paragraph constitutes legal advice.

In addition, the Voluntary Petition prepared by CCSA and Mr. Bohl indicated
that the filing fee was to be paid in installments. To the extent that CCSA and
Mr. Bohl made this selection for the Debtor without his specific instruction to
do so, this is likewise, engaging in the unauthorized practice of law. This
action goes far beyond [*31] mere typing and has legal implications. Here,
Bernales believed he had an urgent, time-sensitive need to file bankruptcy. He
received these e-mail instructions and completed forms from CCSA and Mr. Bohl
and relied on them as sufficient to allow him to file his fee in installments.
Had the Debtor only been prepared to pay an installment on the date he filed his
petition, his petition might have been rejected and, because of this delay, the
Debtor could have suffered irremediable consequences. Fortuitously, this in fact
did not happen here. After he was rejected at the window, he promptly modified
his petition and paid his filing fee in full. n18

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – –

n18 The court notes that actual knowledge that a debtor is able to pay the
filing fee in full when completing these forms, combined with encouragement to
apply to pay in installments and provision of the requisite forms, is
potentially the subornation of perjury. [ILLEGIBLE TEXT]n the Application to Pay
Filing Fee in Installments, the Debtor is required to declare that I am unable
to pay the filing fee except in installments.”

In the same e-mail as the filing fee advice, CCSA further stated as follows:

The attached documents are the only documents required to effectuate
your bankruptcy filing. Your bankruptcy will be effective immediately
upon filing. By law, additional bankruptcy documents including but not
limited to a Summary of Schedules, Schedules A-J, a Statement of
Financial Affairs, Statement of Intention, etc. (approximately 30-35
pages) must be filed within 15 days of your initial bankruptcy filing.
Please let us know (preferably via e-mail) once you have filed the
attached documents with your local bankruptcy court so we’ll know when
your additional documents will be due. The court clerk will provide
you with a deficiency notice informing you as to the 15-day deadline
for submitting additional documents.

Advising the Debtor which documents he needs to file to effectuate his
bankruptcy is also the unauthorized practice of law. By providing Bernales with
solely these limited documents, which did not include at least one required
declaration, CCSA and Mr. Bohl set Bernales up for failure.

Providing the Debtor only with “emergency bankruptcy documents” brings [*33]
up several important issues, the first of which is a “facesheet filing.”
Encouraging a debtor to file a “facesheet filing” is engaging in the practice of
law. How to do such an abbreviated initial filing is not obvious from the Court
‘s website. Instead, it involves “an intelligent choice, or an informed
discretion in advising another of his legal rights and duties.” Taub, 366 F.3d
at 969.

“Facesheet filing,” in particular, carries potentially serious consequences,
particularly post-BACPA. Whereas pre-BACPA, the Debtor would likely only be put
to he additional risk and expense of having to file a second bankruptcy if he
did not file the remaining paperwork in time and his case were dismissed, the
situation changes drastically post-BACPA. Under 11 U.S.C. � 362(c)(3), in
general, if an individual debtor had a case that was dismissed within the
previous year, the automatic stay automatically terminates after only thirty
days. The debtor may move to extend the automatic stay, but must show good
faith. However, statutorily, “a case is presumptively not filed in good faith .
. . as to all creditors, if . . . a previous case under any of chapters [*34]
7, 11, and 13 in which the individual was a debtor was dismissed within such
1-year period, after the debtor failed to file . . . documents as required by
this title or the court without substantial excuse . . . .” 11 U.S.C. �
362(c)(3)(C)(i)(ll)(aa). Mere inadvertence or negligence, in general, are not a
substantial excuse. Id. Moreover, the debtor must overcome this presumption by
clear and convincing evidence.

Under normal circumstances, Debtor’s case should have and would have been
dismissed much earlier than it was. The only reason it was not dismissed earlier
was because the clerk’s office was backlogged with filings from the “hurricane”
of filings that were filed the week preceding October 17, 2005, immediately
before the major provisions of the BAPCPA went into effect. If Debtor should
file a second bankruptcy, his automatic stay will only last thirty days absent a
court order extending it. Debtor would be hard pressed to extend the automatic
stay by showing his good faith by clear and convincing evidence, since there
would be a statutory presumption against him. Moreover, should this second case
also be dismissed, Debtor will have no automatic [*35] stay at all. See 11
U.S.C. � 362(c)(4)(A)(i). Dismissal now has widespread implications under the
Code. This factor highlights why the election to engage in a “facesheet filing”
is a significant legal decision, and is not a decision that should be
encouraged, let alone made, by bankruptcy petition preparers.

A second reason why a “facesheet filing” was especially inappropriate in this
case was that by engaging in a “facesheet filing,” the Debtor, CCSA and Mr. Bohl
put off completing Form B22A, the means test calculation form, until some time
later. By filing a “facesheet filing,” the Debtor inappropriately and
prematurely elected to pursue Chapter 7 relief instead of Chapter 13 relief.
Because he filed under Chapter 7, however, without due consideration to his
monthly income level and expenses, the presumption of abuse arose under 11
U.S.C. � 707(b)(2)(A)(i). While, under 11 U.S.C. � 362(c)(3), dismissal under
section 707(b) would not shorten the automatic stay in a subsequent case like a
dismissal for failure to file schedules would, dismissal under this section
would cause the Debtor to incur numerous [*36] unnecessary expenses. In
addition to any expenses incurred in filing and maintaining the Chapter 7 case,
the Debtor would have to pay, at minimum, filing fees to convert his case to
Chapter 13 or to file a new Chapter 13 case. Had all of the documents been
prepared at the same time and had CCSA and Mr. Bohl not felt competent enough to
make an intelligent decision to file a facesheet filing,” this unfortunate
situation might never have arisen. However, because CCSA and Mr. Bohl decided to
play lawyer, it did.

To make matters far worse, and to take the discussion beyond the purely legal
question of whether CCSA and Mr. Bohl engaged in the unauthorized practice of
law, CCSA and Mr. Bohl completely bungled this matter. The control and timing of
turning over the documents to the Debtor for filing was completely in their
hands. The Debtor daily begged and pleaded in his e-mails for CCSA and Mr. Bohl
to send him his completed documents in time to meet the deadline, and they
failed him time and again. Worse, they led the Debtor to believe, to his
detriment, that the documents would be ready in no time and there would be no
problem. CCSA’s website prominently stated: ‘Consumer Credit Services [*37] of
America can prepare your Chapter 7 or 13 Official Bankruptcy Forms in as little
as one day . . . .” Moreover, CCSA made specific representations to the Debtor
by e-mail: “We know what is missing and will get them to you a day or 2 prior to
the deadline.” In particular, on the date of his deadline, the Debtor e-mailed
Mr. Bohl again as to the status of the documents. He got an out-of-office reply:
“Your case coordinator, Greg Bohl, has been out on medical leave. A Bankruptcy
Questionnaire is attached. Please complete the Questionnaire and return it to us
asap via fax. . . . We can complete your bankruptcy documents and e-mail them to
you within an hour or so after we receive the completed Questionnaire from you.”
In Court, Mr. Bohl testified that the Questionnaire is a simplified version of
the questions found in the Schedules and Statement of Financial Affairs, and
that CCSA uses this Questionnaire to complete their debtors’ paperwork. This
suggests that despite all assurances they were working on Debtor’s paperwork,
CCSA and Mr. Bohl put off doing much, if any, of this work until the eleventh
hour. This conclusion is bolstered by the fact that the papers, which by their
own statements [*38] only take an hour to complete, were not ready until
December 13, 2005 and were not filed until December 15, 2005, although they were
due on December 8. CCSA and Mr. Bohl left the Debtor in a lurch. Mr. Bohl, his
primary contact person, was out of the office, but no notice was provided to
Bernales of this until he received the e-mail, and apparently there was no
backup person to assist in filing the remaining papers. Put simply, CCSA and Mr.
Bohl show no signs that they cared, which is especially troubling considering
how prejudiced the Debtor would soon be by a dismissal. Had an attorney
conducted himself with the same ineptitude, he or she could have been sanctioned
and the debtor would have had recourse to a malpractice policy for any harm or
ineptitude caused.

c. Motion for Extension of Time

For the sake of completeness, during these delays, CCSA and Mr. Bohl actually
did do something to help the Debtor. They encouraged him to file a motion to
extend the deadline to file the remaining paperwork. While it appears that
neither CCSA nor Mr. Bohl actually drafted the motion itself, their mere
encouragement of this is also the unauthorized practice of law, and has legal
consequences. [*39] Their wholehearted faith in its approval was
inappropriate. The fact that it was filed seems to have fueled their
lackadaisical attitude toward timeliness. The Court very well could have denied
the motion to extend the deadline, but it did not. Notwithstanding the fact that
this advice actually helped the Debtor, it was unlawful for CCSA and Mr. Bohl to
give it. Rather, hey should have simply provided the Debtor with all of the
necessary documents at once. They should have never meddled with “emergency
bankruptcy documents” in the first place. This way they could have properly
limited their role to typing and would never have felt the need to engage in the
unauthorized practice of law to dig the Debtor out of a hole that they
themselves where a primary force in creating.

d. Legal Interpretation of the Deadline

Next, CCSA and Mr. Bohl engaged in the unauthorized practice of law in
advising the Debtor what constitutes “15 days” for the purpose of meeting his
deadline. Anxious meet his deadline, the Debtor asked CCSA and Mr. Bohl whether
the 15 day deadline means “15 business days or 15 days total including weekends.
” Rather than simply advise the Debtor to refer to the case commencement [*40]
deficiency notice, CCSA and Mr. Bohl gave the Debtor their interpretation of
FRBP 9006. They wrote: “15 calendar days, including weekends. Exclude the day
your initial documents were filed [ILLEGIBLE TEXT]f the last day falls on a
weekend or holiday, the due date is extended to the next court business day.
Courts usually allow 1 or 2 extra days.” For the most part, CCSA and Mr. Bohl
happen to be correct. However, had they been wrong and had the Debtor relied on
their interpretation, the Debtor could have been prejudiced, and without the
same remedies he might have against an attorney.

e. Advice Regarding the Debtor’s Duties

CCSA also, in one of their e-mails, provided the Debtor with a list of what
the Debtor is required to do under 11 U.S.C. � 521. In this short list, they
advised the Debtor to (1) file evidence of income with the Court within 15 days,
and (2) provide the Chapter 7 Trustee with a copy of the Debtor’s most recent
federal income tax return at east seven days before the meeting of creditors.
This list is legal advice. Although the above are, indeed, duties under 11
U.S.C. � 521 [*41] , this list is incomplete. Notably, CCSA and Mr. Bohl never
mentioned that the Debtor is required to file the section 342(b) certificate.
This is a certificate Congress now requires demonstrating that the debtor was
aware of which bankruptcy chapters were available and the services available
from credit counseling agencies. See 11 U.S.C. �� 342(b), 521(a)(1)(B)(iii). In
fact, it appears that they never provided the Debtor with the required section
342(b) notice in the first place. In addition, CCSA and Mr. Bohl did not advise
the Debtor to file a statement of the amount of monthly net income or a
statement disclosing any reasonably anticipated increase in income or
expenditures. See 11 U.S.C. � 521(a)(1)(B)(v) and (vi). Again, had the Debtor
relied on this as a complete list, he would have done so at his detriment.
Rather than take the advice of a Florida-based bankruptcy petition preparer, who
is not entitled to give legal advice and is unfamiliar with this district, the
Debtor should have been referred to the list of forms in the Chapter 7 Package
on the Court’s website.

f. Means Test Advice

On [*42] December 5, 2005, the Debtor sent an e-mail to Mr. Bohl, stating:
“[Y]ou were suppose to let me know if we needed to switch to a Chapter 13 if I
didn’t qualify for the Means Test for the Chapter 7, any luck on this?” He
received a reply stating: “We will review your file regarding the means testing
and get back to you when we send your additional documents. We should be
e-mailing them to you by tomorrow morning.” On November 13, 2005, the date the
documents were finally complete and sent to the Debtor for filing, CCSA sent the
Debtor its assessment of the means test:

According to the monthly income and expenses you provided, and after
subtracting all allowable deductions as alowed [sic] under the
bankruptcy laws, you and your wife have over $ 900 left over each
month. You definitely don’t qualify for Chapter 7. If you convert to
Chapter 13, your monthly payment will be over $ 900 per month. Your
combined annual gross income is over $ 114,000 per year. Your best bet
is for us to contact the company that served the garnishment and try
to work out a monthly payment plan.

After being questioned by the debtor as to why the numbers on the means test
form (Form 22A) [*43] were different from those on Schedule I, CCSA sent the
following reply:

Schedule J lists your actual claimed expenses. However, the new “means
testing” provisions of the new bankruptcy laws disregards [sic] your
actual claimed expenses and only allow standard deductions for various
categories of living expenses, regardless of what your actual expenses
are. [P] For example, you might claim $ 250 a month on home
improvements/repairs on Schedule J, but the new bankruptcy laws only
allow you a certain amount ($ 1,400 monthly for example for a family
of 3) for food, clothing, housekeeping items and miscellaneous living
expenses. [P ] You might claim $ 200 a month for entertainment
expenses, but the new means testing does not allow that. You might
claim $ 600 monthly for a private school for your child, but the means
testing provisions do not allow for a private school. [P ] Form B22A
lists your combined gross monthly income and then subtracts standard
allowable expenses in certain categories. That’s why it is different
from your actual expenses as claimed on Schedule J. Since your
combined gross annual income is well over the median family income for
your state, the [*44] new bankruptcy laws disregard your actual
expenses as claimed on Schedule J and use the authorized deductions as
reflected on Form B22A. According to the new means testing laws, you
have over $ 900 left over each month after legally allowable
deductions from gross income.

Explaining the meaning, rationale and workings of a bankruptcy statute, rule
or form constitutes the practice of law. This is particularly so with respect to
untested, uninterpreted, novel and unfamiliar statutes, rules and forms. The
application of the means test under 11 U.S.C. � 707(b)(2) is one of the most
discussed new provisions of the BAPCPA. Most attorneys do not agree on how this
section should be applied in practice, and little in the way of judicial
interpretation has been issued so far. Thus, any attorney providing advice on
whether a debtor is subject to the Chapter 7 means test would do so with
reservations at this point. That a non-attorney not under the supervision of any
licensed attorney would consider venturing into this area in any way is
extremely disturbing. It also, following a consistent pattern, constitutes the
unauthorized practice of law.

g. Inclusion of All [*45] Creditors

The e-mail in which CCSA attached the prepared copy of the petition for the
Debtor also included the following language: “After filing, you may add or
delete creditors, if necessary, or make any other changes or amendments that you
wish. You will have plenty of time to do so.” This is an extraordinary piece of
legal advice. Adding or deleting creditors can raise significant issues in a
case. Under FRBP 2002(a), creditors in a chapter 7 case are entitled to twenty
days’ notice of, inter alia, (1) the meeting of creditors, (2) a proposed use,
sale or lease of property of the estate, (3) a hearing on approval of compromise
or settlement, (4) the hearing on the dismissal of the case, (5) certain
requests for compensation or reimbursement, and (6) the time for filing proofs
of claims. Lightly adding and deleting creditors could pose major problems to
adequate notice of such items.

Deleting creditors, or adding them too late in the day, is extremely likely
to prejudice creditors. They might have no notice of the bankruptcy. They could
miss their deadline to file their proof of claim. They might not be aware of a
critical hearing. And, most [*46] significantly for certain creditors, they
might also miss the deadline for filing a nondischargeability complaint. Under
FRBP 4007, nondischargeability complaints may only be filed up to the sixtieth
day after the first day set for the meeting of creditors. If the creditors do
not receive the appropriate notices, they will not meet the deadline. Advising
the Debtor, with the words that he had “plenty of time” to add or delete
creditors, not to be concerned about accuracy or timeliness was reckless at
best. These words could have lured the Debtor into not making a timely search
for all creditors and indeed not adding them as appropriate. This would have the
effect of possibly prejudicing both them and the Debtor later. n19

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – –

n19 In the words of Judge Alan Jaroslovsky, “[t]he actions of [CCSA and Mr.
Bohl] constitute a classic example of how bumbling non-lawyers can cause serious
problems for their ‘clients’ even in very simple bankruptcy cases.” In re Powell
, 266 B.R. 450, 451 (Bankr. N.D. Cal. 2001).

The Questionnaire itself requires little discussion. Mr. Bohl explained that
CCSA uses the Questionnaire to simplify the language of the required forms to
assist CCSA translate the answers into the appropriate Schedules and the
Statement of Financial Affairs. Under applicable case law, this is the
unauthorized practice of law. “Soliciting information from a debtor [by use of a
questionnaire] which is then typed into schedules constitutes the unauthorized
practice of law.” Agyekum, 225 B.R. at 702. Notably, the creation and use of the
Questionnaire requires interpretation and understanding of the meaning of the
questions in the Schedules and Statement of Financial Affairs. Bankruptcy
petition preparers are prohibited from giving explanations or providing
definitions of terms. Taub, 366 F.3d at 971.

i. Selection of Exemptions

The Debtor testified in Court that he did not select his exemptions. Instead,
Mr. Bohl stated that he and CCSA did. They apparently have a list of applicable
state and federal exemptions and enter the one that seems to fit the best and
yields the greatest amount. This, like the Questionnaire, requires [*48] little
discussion, because it also is clearly the practice of law. The choice of
exemptions involves an analysis of the debtor’s assets and how they can be
protected under various exemption choices. “[A]dvising of available exemptions
from which to choose, or actually choosing an exemption for the debtor with no
explanation, requires the exercise of legal judgment beyond the capacity and
knowledge of lay persons.” Kaitangian, 218 B.R. at 110; see also In re Pillot,
286 B.R. 157 (Bankr. C.D. Cal. 2002).

j. Website

Lastly, the Court turns to CCSA’s website. Because the Debtor primarily
relied on the information provided on the CCSA website and because
internet-based bankruptcy petition preparers seem to be proliferating, it is
worth noting in some detail the many issues raised by the text of the CCSA
website. While Mr. Bohl revised and promised to revise further the website text
during these proceedings, at the time Bernales accessed the site, it was chock
full of both legal advice and inaccurate information in its Frequently Asked
Questions section. n20

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – –

n20 Although this fact has no bearing on the Court’s decision in this case,
this Court takes note of the fact that Mr. Bohl and CCSA have made little to no
revisions to their website despite the helpful recommendations by both the Court
and the U.S. Trustee.

For example, CCSA gives advice generically on whether certain debts are
nondischargeable. “Can my creditors object to my bankruptcy discharge?”
“Creditors rarely have grounds to object to your bankruptcy discharge and almost
never do unless a particular debt was fraudulently incurred.” The website
discourages debtors from hiring attorneys, irrespective to the specific facts of
their case. “Do I need an attorney to file bankruptcy?” “No. After you file
bankruptcy, you will simply need to meet with a bankruptcy trustee. A typical
trustee meeting lasts about 1-3 minutes and you do not need to be represented by
an attorney. Individuals without attorneys filed an estimated 510,000 successful
bankruptcies in the United States last year.” The website even goes so far as to
offer procedural advice. “If I have been served with a summons in a civil case,
am I required to appear in court?” “No. A court summons is an official
notification in a civil case that informs a defendant that a lawsuit has been
filed against him or her. A defendant is not required to attend any scheduled
court hearing or pretrial conference unless the defendant has a legal defense
that he or she wants to present to the [*50] court. If the defendant fails to
appear in court, the case will be uncontested and a court judgment will be
entered against him or her by default. However, if the defendant subsequently
files bankruptcy, the court judgment will be null and void under section 524 of
the United States Bankruptcy Code and the debt will be discharged.” And the list
goes on and on.

All of this generic advice can make a huge difference in an individual case
and be extremely harmful. It far exceeds the limited role of the typist. Worse,
there are no disclaimers recommending that debtors get specific advice in their
individual cases. Quite the opposite — the website discourages debtors from
going to attorneys, regardless of the complexity of their individual situations.
Mr. Bohl’s and CCSA’s livelihood appears to depend on this. The theme seems to
be to lure debtors into using CCSA and then try to help them quickly slip
through the system before anybody notices. This is practicing law in its worst
and sloppiest form.

This Court wishes to make clear that it is explicitly not making a finding
that CCSA or Mr. Bohl have engaged in the unauthorized practice of law by merely
providing [*51] legal information to debtors through its website. Mr. Bohl
asserted that the information on CCSA’s website is analogous to legal
literature, which he contends he is lawfully permitted to distribute without a
license to practice law under the First Amendment. Putting aside the question of
whether distribution of legal information constitutes the unauthorized practice
of law, it is clear that much of the information on the website is nonetheless
“fraudulent, unfair, or deceptive” under 11 U.S.C. � 110(i)(1). As section
110(i)(1) is a valid regulation of commercial speech, any First Amendment
concerns raised by Mr. Bohl are not implicated here. As discussed in depth in In
re Doser, 412 F.3d 1056, 1062-64 (9th Cir. 2005), the regulation of bankruptcy
petition preparers under section 110(i) complies with the four-part test used to
evaluate the protection due commercial speech under Central Hudson Gas & Elec.
Corp. v. Pub. Serv. Comm’n, 447 U.S. 557, 562-63 (1980). This discussion does
not address accurate, non-misleading information provided as general information
on a website.

Before preparing any document for filing or accepting any fees from the
Debtor, CCSA and Mr. Bohl were required to provide the Debtor with written
notice (Form B19B) informing him “in simple language that a bankruptcy petition
preparer is not an attorney and may not practice law or give legal advice.” 11
U.S.C. � 110(b)(2)(B). The form “may contain a description of examples of legal
advice that a bankruptcy petition preparer is not authorized to give.” Id.
Finally, this form “shall be signed by the debtor, and under penalty of perjury,
by the bankruptcy petition preparer” and be filed with the petition. Id.
Unfortunately, none of this, apparently, was ever done. Had CCSA and Mr. Bohl
provided Form B19B to the Debtor, one might imagine that the entire unauthorized
practice of law problem might have been abated, since the notice would make the
Debtor aware of the limitations on CCSA and Mr. Bohl. The failure to provide
this form is significant and had potentially harmful consequences.

2. 11 U.S.C. � 110(h)(2)

Finally, 11 U.S.C. � 110(h)(2) [*53] requires that “[a] declaration under
penalty of perjury by the bankruptcy petition preparer shall be filed together
with the petition disclosing any fee received from or on behalf of the debtor
within 12 months immediately prior to the filing of the case, and any unpaid fee
charged to the debtor. . . .” This, however, was not done. Bernales testified in
court that he paid CCSA $ 195, but this was never disclosed. Thus, CCSA and Mr.
Bohl violated this section also.

C. Sanctions

1. Fines or Damages to be Paid to the Debtor and U.S. Trustee

“All fees charged by a bankruptcy petition preparer may be forfeited in any
case in which the bankruptcy petition preparer fails to comply with this
subsection or subsection (b), (c), (d), (e), (f), or (g).” 11 U.S.C. �
110(h)(3)(B). In light of CCSA’s and Mr. Bohl’s violations of 11 U.S.C. � 110(e)
and other provisions of section 110, this Court orders the disgorgement of all
fees paid by the Debtor.

In addition, under 11 U.S.C. � 110(i), “[i]f a bankruptcy petition preparer
violates this section or commits any act that the court finds to be fraudulent,
unfair, [*54] or deceptive, . . after notice and a hearing, the court shall
order the bankruptcy petition preparer to pay to the debtor (A) the debtor’s
actual damages; (B) the greater of (I) $ 2,000; or (ii) twice the amount paid by
the debtor to the bankruptcy petition preparer for the preparer’s services; and
(C) reasonable attorneys’ fees and costs in moving for damages under this
subsection.” 11 U.S.C. � 110(i)(1). In order for 11 U.S.C. � 10(h)(3)(B) not to
be a superfluous provision, this Court understands 11 U.S.C. � 110(i)(1) to
provide supplementary damages to the Debtor in addition to fee disgorgement
under subsection (h)(3)(B). Since Debtor has not proved actual damages, this
Court will order an additional fine of $ 2,000 to be paid to the Debtor.

Under 11 U.S.C. � 110(l)(1), “[a] bankruptcy petition preparer who fails to
comply with any provision of subsection (b), (c), (d), (e), (f), (g), or (h) may
be fined not more than $ 500 for each such failure.” Here, although CCSA’s and
Mr. Bohl’s failures have been extensive, this Court believes an additional fine
of $ 2,000 against CCSA and [*55] Mr. Bohl to be a sufficient sanction for
their conduct in this case. Pursuant to 11 U.S.C. � 110(l)(4), this amount shall
be paid to the U.S. Trustee.

CCSA and Mr. Bohl shall be jointly and severally liable for all of the above
fines and the fee disgorgement. CCSA and Mr. Bohl are ordered to disgorge such
fees and pay such fines by no later than June 30, 2006. They are further ordered
to provide proof of payment to the court within ten (10) days after disgorging
their fees and paying the above fines. Failure to comply with the these terms
may result in a finding that Mr. Bohl and CCSA are in civil contempt, which
could result in assessment of fines and/or penalties, sanctions, incarceration,
or further injunctive relief.

3. Injunction

At the March 15, 2006 hearing, the United States Trustee filed with the court
a request for judicial notice, which detailed prior related misconduct by CCSA,
Mr. Bohl and others. n21 The first exhibit to the request for judicial notice
was an order entered on September 17, 2004 in the U.S. Bankruptcy Court of the
Southern District of Texas entitled Order for Disgorgement, Payment of Fine and
Permanent Injunction Prohibiting [*56] Greg Bohl, Garo G. Anadolian and
Consumer Credit Services of America from acting as Bankruptcy Petition Preparers
in the State of Texas. The order specifically found that CCSA, Mr. Bohl and
others had engaged in the unauthorized practice of law and had violated 11
U.S.C. � 110. In light of that, the order permanently enjoined them from acting
as bankruptcy petition preparers in Texas, ordered a disgorgement of fees and
find them $ 200, payable to the United States Trustee.

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – –

n21 At the March 15, 2006 hearing, before Mr. Bohl had been made aware that
he court had copies of these orders, Mr. Bohl insinuated that he had never had
any trouble with any other court before. After he was aware that the court knew
of these orders, he openly misrepresented the substance of both of these orders
and the facts on which they were based, notwithstanding the clarity and scope of
the above orders. He stated these orders were because of a purported prohibition
against legal how-to books and a $ 50 cap on what you can pay to bankruptcy
petition preparers, neither of which are mentioned in he orders.

The request for judicial notice also included an order entered on September
29, 2004 in the U.S. Bankruptcy Court of the Western District of Texas. This
order specifically found that Mr. Bohl, CCSA and their agents and employees had
been engaging in (1) advising persons concerning the filing of a chapter 7
bankruptcy case, (2) advising persons or assisting persons in the selection of
exemptions, (3) advising persons as to what property or debts should be listed,
or soliciting information from them to reformulate onto the petition, schedules
and statement of financial affairs, (4) advising persons how to list debts as
secured, unsecured or priority, (5) defining terms for persons such as executory
contracts, leases, exemptions and reaffirmation, (6) directing persons to
portions of a statute or other materials for explanations of exemptions, how to
schedule property and what will happen in a bankruptcy case, (7) collecting fees
for acts and conduct which constitute the practice of law, which Mr. Bohl and
CCSA were not licensed to practice, (8) giving advice or rendering any service
requiring the use of legal skill or knowledge. Based on the foregoing, the
court, inter alia, ordered [*58] a disgorgement of fees, fined CCSA and Mr.
Bohl $ 500, and permanently enjoined them “from rendering legal advice and
preparing or assisting in the preparation of any document to be filed in any
bankruptcy case in any bankruptcy court in the Western District of Texas,
whether over the internet, via e-mail, computer software or any other electronic
transmission, or by any other means.”

Given the extensive violations in this and prior cases and, an injunction is
also appropriate under 11 U.S.C. � 110(j). Under this section, the Court may
“enjoin a bankruptcy petition preparer from engaging in any conduct in violation
of this section or from further acting as a bankruptcy petition preparer.” Under
Demos v. Brown (In re Graves), 279 B.R. 266, 272 (9th Cir. B.A.P. 2002), this
Court may issue such an injunction sua sponte. This Court may grant such an
injunction against CCSA and Mr. Bohl if it finds that they have “engaged in
conduct in violation of this section or of any provision of this title.” 11
U.S.C. � 110(j)(2)(A)(i)(l). As shown from this and prior cases, CCSA and Mr.
Bohl have continuously engaged in extensive [*59] violations of 11 U.S.C. � 110
, and likely other sections of the Code as well. n22 They have also shown a
total lack of remorse or reflection, rather Mr. Bohl objects to “being treated
like a criminal.” As such, I find that CCSA’s and Mr. Bohl’s wrongful conduct
could not be halted by mere injunction against improper conduct itself. Thus,
this Court permanently enjoins CCSA and Mr. Bohl from further acting as
bankruptcy petition preparers in the Central District of California, whether
over the internet, via e-mail, computer software or any other electronic
transmission, or by any other means.

– – – – – – – – – – – – – – Footnotes – – – – – – – – – – – – – – –

n22 For the sake of completeness, I should note that, in addition to their
violations of 11 U.S.C. � 110, there also appear to have been violations of 11
U.S.C. �� 527 and 528. It appears that disclosures were not provided to the
Debtor, as required by 11 U.S.C. � 527(a) and (b). Also, a review of CCSA’s
website reveals that it failed to provide the required “debt relief agency”
disclaimer, as required by 11 U.S.C. � 527(a)(4).

It is apparent that, at best, CCSA and Mr. Bohl are confused about what the
practice of law is. While completing the Official Bankruptcy Forms is an
extremely difficult task for an individual with little or no knowledge of
bankruptcy laws, it is clear that CCSA and Mr. Bohl, no matter what their
self-perceived knowledge of bankruptcy may be, are not qualified under the law
to assist debtors by offering legal advice.

CCSA and Mr. Bohl did even what the most preeminent bankruptcy petitioner in
Florida would be forbidden to do: they practiced law in California. If anything,
this case exemplifies why competent legal counsel is important: they are
familiar with local rules and procedures, they are in close proximity with the
client if he or she needs assistance, and they can give debtors the legal advice
that they need. This is not so with bankruptcy petition preparers like CCSA and
Mr. Bohl. Because of their unfamiliarity with the law and procedure of this
district, their lack of proximity to the Debtor and their inability to give
competent legal advice, their actions ultimately had unfortunate consequences
for Bernales, whose case was dismissed for failure [*61] to file all of the
required documents, including any credit counseling certificate. Although the
Court sympathizes with indigent debtors, this is no justification to turn a
blind eye to the unauthorized practice of law by bankruptcy petition preparers,
especially as they often tend to cause far more harm than good.

In conclusion, this Court has determined the appropriate sanction to be (1)
disgorgement of fees, (2) a fine of $ 2,000 to be paid to the Debtor, (3) a fine
of $ 2,000 to be paid to the U.S. Trustee, and (4) a permanent injunction
prohibiting CCSA and Mr. Bohl from further acting as bankruptcy petition
preparers in the Central District of California, whether over the internet, via
e-mail, computer software or any other electronic transmission, or by any other
means.